Water is critical for sustaining life. It performs essential functions within terrestrial and marine ecosystems and represents an important input into Australia's economy, particularly agriculture.

Long-term drought in many parts of Australia together with increasing evidence of the adverse effects of increased water use on river health, has changed the way Australians regard water. Taking too much water out of Australia’s river and groundwater systems can have detrimental economic and environmental consequences. These can impact biodiversity, causing declines in native animal and plant populations and reducing agricultural production (e.g. reduced availability of water for irrigation).

Water management

The states and territories, along with the Australian Government, officially recognised the need to improve the efficiency of water use and the health of Australia’s river and groundwater systems, with the signing of the National Water Initiative (NWI) in 2004, built on the Council of Australian Governments (COAG) framework for water reform signed in 1994. The NWI involves a range of reforms to the water industry, including improved water planning, water trading and water accounting. The Water Act 2007 established the Bureau of Meteorology as the major custodian of all water related data including collection, publication and implementation of water information standards. The Murray-Darling Basin Authority was also established under this Act, making it responsible for a national focus on water management in the Murray-Darling Basin.

Water markets are an important mechanism for allocating water efficiently and contributing to NWI goals of managing water to optimise economic, social and environmental outcomes. The National Water Commission, Australian Water Market Report, 2007-08 estimated the value of transactions for traded water was $1.68 billion, with 32,205 trades involving 2,515 gigalitres (GL) of water.

Water availability

Water is principally made available to society from surface water in the form of rivers, lakes, reservoirs, dams, and rainwater tanks, and from underground aquifers in the form of wells and bores. The amount of water available has consequences for agricultural production, household and commercial/industrial requirements, and for those recreational facilities that are dependent on fresh water resources. Water availability is also critical for the maintenance of ecological systems, such as rivers, lakes, and wetlands.

The island continent of Australia is totally dependent on precipitation (rainfall and snow) for its water supply. Because Australia is the driest continent (after Antarctica), man-made water storage is critical in maintaining society's water supply. Water run-off from the land fills natural and man-made surface water storages and water seeping through the soil recharges groundwater supplies in aquifers. Recognising the connectivity between surface and groundwater resources, the NWI parties have agreed to manage connected systems as single resources.

Rainfall, run-off and water storage are examined in the following sections.

Average annual rainfall varies considerably across Australia. Large areas have average annual rainfall of 600-1,500 millimetres (mm), a range similar to most European and North American averages. But about half of the continent experiences average annual rainfall of less than 300 mm.

In recent years, many parts of Australia, notably the south-east of the continent, southern Queensland, and the Murray-Darling Basin, have experienced drought conditions, with consequent lowering of water storage levels.

In the 12 months from September 2008 to August 2009, highly populated areas in New South Wales and Victoria, including the Murray-Darling Basin were under stress, with below average rainfall. The south-east of Australia has been abnormally dry, while the north-east has been abnormally wet (map 3.9).

The drought conditions experienced across much of Australia are evident in a two year rainfall anomaly map (map 3.10). A rainfall anomaly map shows the deviation from the annual average rainfall. According to the Bureau of Meteorology, rainfall has been below average across much of south-west and south-east Australia since 1997, while the Murray-Darling Basin has experienced below average rainfall since 2002. These are critical agricultural areas in Australia.

Run-off

Run-off of rainfall into water stores is affected mainly by topography, soil condition, and temperature, as follows:

the nature of the soil (e.g. sandy soils, clays) affects the amount of water that will run off, as does the condition of the soil (e.g. dry)

soil condition and land cover

in very hot weather (e.g. summer) much of the rainfall may be lost to evaporation. Likewise, the loss of water from transpiration in plant leaves and the consequent requirement for replenishment would decrease the amount of water available for run-off.

Based on long-term averages, run-off is high in northern Australia and parts of Tasmania where annual rainfall is relatively high (map 3.11).

Surface water and groundwater are stored in a number of ways to supply agriculture, industry and urban users. Some of these storages include large dams, farm dams and aquifers (underground storage).

There were 501 large dams in Australia as at June 2005 with a total storage capacity of 83,853 GL. Storage levels declined continuously in the period 2001-05 (graph 3.12) as a result of reduced inflows, continued water extractions and climatic conditions. In the 12 months to June 2005 total storage levels decreased by 10% (from 44,164 GL to 39,959 GL).

3.12 total storage level of large dams

Water use

Water use is important to quantify because it gives a baseline for the amount of water that society needs to operate, the pressures placed on water systems by society, and the impacts of water management decisions on society. Measuring patterns of water use is important when predicting future land use, developing policy initiatives, or when reviewing the impact of present and past practices. For example, water use patterns give an indication of where water use efficiency programs or the buy-back of water licences should be focused. An assessment of water use by industry and households enables water managers to target management tools like drought contingency programs (e.g. water restrictions). Comparing water use with the economic value generated shows which activities are returning more economic value to society as a result of using the resource.

The ABS Water Account for 2004-05 showed that agriculture was by far the largest consumer of water, accounting for 65% of total water consumption in that year, with households the next highest sector (11%), followed by the water supply industry (11%) and manufacturing (3%).

Agricultural water use

The agriculture industry remained a major consumer of water in the Australian economy in 2007-08. Australia's agricultural water use in 2007-08 decreased 18% from the previous year to 6,989 GL. This followed a drop of 27% in 2006-07 compared with 2005-06. Agricultural water use has continued to be impacted by reduced water availability due to the drought.

Of the water used for agricultural production in 2007-08, 90% was used for irrigation of crops and pastures. The remainder was used for other agricultural purposes, such as stock drinking water, dairy and piggery cleaning.

Irrigation water use was at a new low of 6,285 GL in 2007-08, following a decrease of nearly one-third in the preceding year (see graph 3.13).

The largest decrease in water use for irrigation was recorded in the Murray-Darling Basin, an area of national significance in terms of environmental and agricultural assets. (A case study on the Murray-Darling Basin features later in this section). For the two years 2006-07 and 2007-08, water use for irrigation dropped 40% and 30% respectively. In contrast, irrigation use for the rest of Australia decreased much less in both years, falling 6% between 2005-06 and 2006-07 and 1% between 2006-07 and 2007-08 (table 3.14).

3.13 Agricultural water use for irrigation

3.14 AGRICULTURE WATER USE FOR IRRIGATION, Australia and Murray-Darling Basin

Of the 1,351 GL decrease in irrigation water use in Australia between 2006-07 and 2007-08, more than two-thirds (928 GL) was in New South Wales. All states and territories reported decreased irrigation use except Queensland, which remained steady. As a result, Queensland became the largest irrigating state, using 1,843 GL or 29% of total water use for irrigation in 2007-08 (table 3.15).

When looking at water use by agricultural activity, the rice industry showed the effects of dry conditions and limited irrigation water, using 27 GL of irrigation water in 2007-08, a decrease of 89% from the previous year. This drop in application of irrigation water followed a fall of 81% in 2006-07. Cotton growers faced similar conditions in 2007-08 and applied 309 GL of irrigation water, in comparison to 868 GL used in 2006-07 (graph 3.16). Irrigation water used for pasture and crops has decreased from 4,887 GL in 2005-06 to 3,737 GL in 2006-07 to 3,445 GL in 2007-08.